Incarceration, Inc.

by Garrett Murphy

[from the July 19, 2004 issue of The Nation]

If you want to win a political race in the little south-central Arizona town of Florence, look for work in the area or just hear the local gossip, chances are pretty high that you'll find your way to Gibby's Bar. All day long, behind its old saloon doors, along its dim interior, that's where the town drinks. Surrounded by slightly absurd-looking saguaro cacti and harsh scrub-desert, along with a smattering of cotton fields and pecan farms, Florence is a raw town whose men and women drink hard and talk a talk from which more delicately constituted big-city dwellers might recoil in horror. The copper miners--the few who are left after decades of downsizing--come here after a day's work in their union jobs in the surrounding red-rock mountains. And so do the prison guards.

These days, as is the case with so many other depressed Main Street communities, there's no shortage of correctional officers. They come from the vast, and continually growing, state prison that's been in Florence for as long as Arizona has been a state (the prison's gigantic, ponderous, red-leather-covered ledgers from the early days now reside in the Pinal County historical museum, just down Highway 79, as do the nooses from executions and several of the leather belts used to strap down those condemned to die before they were gassed); they come from the county jail; they come from the two private prisons, one for low-end felons from Arizona, the other mainly housing out-of-state inmates from Alaska and Hawaii; and they come from the sprawling federal holding facilities in the dirt-poor neighboring town of Eloy, some run by the Feds, others under private contracts, which hold Immigration and Customs Enforcement and US Marshals Service detainees. Many of the guards used to be miners. Others commute from job-starved communities across the south and central belts of Arizona.

"Our town supposedly has 17,500 people in it," muses Don Penson, an iron-jawed 66-year-old retired major from the state prison, whose son-in-law is warden of the CSC Florence West private facility. "[But] only 3,500 are free-world people." The rest, he explains, are prisoners.

In 1978, when Penson began working in corrections, Arizona had about 3,200 inmates. Today, that number is more than 31,000 and still growing, with much of the momentum for the ongoing expansion squarely attributable to the private prison lobby--which recently succeeded in getting the industry exempted from most state taxes. Private prison companies lure state-employed guards by offering short-term bonuses and pay raises. They do not dwell on the fact that, unlike the unionized state prison guards--whose union, AFSCME, has negotiated a generous, and guaranteed, pension package over the years--private guards receive a benefits package that in the long term is virtually worthless. For a few thousand dollars in ready cash, the newly hired private guards give up the possibility of a lifelong guaranteed retirement income. "Ten grand was the going rate last year," David Mendoza, longtime legislative director for AFSCME, says over breakfast in downtown Phoenix. "Five thousand dollars up front; five thousand if they stick it out for a couple years. That buys a pickup truck. The young ones, not thinking about retirement, they're easy prey."

Over the past couple of months, Gibby's Bar has been full of talk about how Terry Stewart, onetime head of Arizona's Department of Corrections, and more recently founder and head of the private security and prison consulting firm Advanced Correctional Management, was dispatched to Iraq, along with his old DOC deputy, Chuck Ryan, to advise on "prison reconstruction." At first, it seemed like easy money: In its $87 billion war package, Congress set aside $10 million to hire 100 prison consultants for six months, working out to an average of $100,000 per consultant, or somewhere in the region of $16,000 and change per month--no wonder Gibby's was rife with stories of locals decamping from their Florence jobs to take on prison duty in Iraq. But the Abu Ghraib torture scandal is beginning to cast an unwelcome light on the private prison industry, from whose ranks key members of the Justice Department's Iraqi "criminal justice reconstruction team" were drawn. After all, Abu Ghraib was controlled in the early days by one Lane McCotter; to spend time in Iraq, McCotter, who returned to the United States in September, took a leave of absence from his job as director of business development for corrections at Management and Training Corporation, a Centerville, Utah-based private prison company that hired him after he resigned as head of Utah's department of corrections following a scandal surrounding inmate deaths. After he returned, MTC began considering a bid, in conjunction with another US private prison company, to manage one of the new "Supermax" prisons being developed in Iraq (this was dropped after the Abu Ghraib scandal).

"In importing democracy in America to Iraq," says Bret Huggins, a public defender, a vice president of Arizona Attorneys for Criminal Justice and a no-nonsense, beer-swilling Gibby's regular, "we've decided they needed a private prison system. It's another Bush giveaway to corporate America."

As sordid as it is, it's no great surprise that the private prison industry would want a piece of the Iraq pie. Under the current Administration the industry has aggressively expanded its reach at both the state and federal levels, cashing in on the post-9/11 opportunity to provide more beds for immigration detainees.

Florida Police Benevolent Association legislative assistant Ken Kopczynski, who has spent years tracking the expansion of the private prison sector (the state PBA opposes these institutions because they encroach on union territory, but also on public safety grounds), has identified close to 300 state and federal prisons, jails, juvenile detention facilities and holding centers for illegal immigrants operated by the private sector nationwide, housing some 132,000. Many of these have opened in the post-9/11 era, and more are planned, with proponents telling local communities that building detention facilities is practically a patriotic duty.

In Arizona, activists managed to put the kibosh on a plan to create a 3,200-bed private prison for women, which would have been the largest women's prison in the world. In Santa Fe, New Mexico, opponents prevented the siting of a private immigration holding facility. Proposals for a vast, privately operated federal facility in Maryland were defeated after both of the state's US senators attached their names to the "no" campaign. Yet while opponents have managed to apply the brakes successfully against a handful of proposed facilities, today private prison companies are central participants in the incarceration business nationally. "They say, 'Here's economic development. This business wants to come in and give you jobs,'" says Edwin Bender of the Institute on Money and State Politics. "They don't tell the communities the companies make a profit on the margins, and that profit relies on low wages and poor job training."

Throughout the border states of the Southwest, across the Southeast and in the Midwest, ribbons of privately operated federal facilities are springing up. Texas has the most private prisons and holding facilities. Kopczynski estimates that seventy-three of the country's close to 300 private detention centers are in the Lone Star State, and recently the border town of Laredo gave the go-ahead for a mammoth, 2,800-bed warehouse for those slated to be deported. Fifty more facilities are divvied up among Arizona, California and New Mexico.

Twenty years ago, in the early days of America's prison boom, a handful of private companies, most of them with broad expertise in the security industry, saw an opportunity. Their founders, the healer-quacks of a crime-fearing age, hoped to cash in on incarceration, and for several years their business models appeared unstoppable. Corrections Corporation of America (CCA), Wackenhut, CSC and others made enough headway to take their enterprises public. By the early 1990s, as states scrambled to find beds to house War on Drugs prisoners, three-strikers and others on the wrong end of the tough-on-crime stick, private prisons had come to be seen almost as angels of salvation. The companies built prisons quickly, sometimes not even billing the states for the building costs; they claimed to be able to operate on a lower cost per inmate, per day than could the state prisons; they often incorporated newer technologies and architectural innovations; and they stirred up competition in a field long the purview of largely unaccountable state bureaucrats.

One after another, state legislatures, many of them passing bills drafted by the industry-friendly, ultra-conservative American Legislative Exchange Council, opened up their corrections systems to private companies and lavished tax breaks on them.

By the mid-1990s, more than 4 percent of all prisoners were being held in private facilities, and many analysts were predicting that the infant industry would grow exponentially over the coming years. Some hoped to take over the running of entire state prison systems--indeed, as far back as the 1980s, CCA had approached Tennessee with a proposition to run its system; others put their faith in a more stealthy, incremental approach. In New Mexico, a state that ultimately went further than any other in its zest for privatization, by 2000 fully 40 percent of state inmates were living in private prisons. "People want to see wrongdoers go to prison, but at the same time they don't want to pay for it," explains Geoffrey Segal, director of privatization and government reform policy at the pro-privatization Reason Public Policy Institute.

Then, in the late 1990s, private prison companies began taking some serious knocks. Whereas industry-funded studies had asserted that private prisons gave more bang for the buck than their public counterparts, studies by independent researchers called this assertion into question; a number of high-profile abuse and escape cases dented law enforcement confidence in their facilities and eroded the value of their stock; and a series of lawsuits by disgruntled investors further ate away at credibility and profits. Perhaps most devastating of all, CCA and other companies found that they had built too many prisons entirely on spec, and when the country's prison population stopped growing so dramatically, they had a bunch of expensive prisons with no prisoners to fill them [see Eric Bates, "Private Prisons," January 5, 1998, and "CCA, the Sequel," June 7, 1999].

Back at Gibby's Bar, one guard, who used to work at a private facility in Florence, claims that the prison's staff were ordered to arbitrarily tear-gas inmates; that prisoners were locked up in isolation units without the correct administrative procedures being followed; that senior officers were hired who had been fired from state prisons for having sex with inmates and smuggling contraband. Inside other prisons, such as the CCA facility in Youngstown, Ohio, staff abuse of inmates was so manifest that state and federal agencies ultimately yanked their contracts and left the facility empty (the CCA facility reopened as a private prison for federal detainees in April).

In the past few years, however, CCA has received a face-lift; Wackenhut's prison holdings successfully spun off into the GEO Group; and cash-strapped state and federal agencies have once again turned to them as a way to maintain their prison complexes without having to raise taxes or seek voter approval for the issuing of billions of dollars of general-revenue prison bonds. Referring specifically to federal agencies responsible for detaining illegal immigrants and those charged with federal crimes, Geoffrey Segal says, "It'll be very hard for any of these agencies to build a new facility without strongly considering it being private, simply because they don't have the money."

Many small states have chosen to export large numbers of their prisoners to out-of-state private facilities rather than bear the cost of building their own new prisons (a handful of Western legislators have even proposed building private prisons in Mexico to house non-citizen state prisoners). In December 2003, in New Hampshire, the Governor's Efficiency in Government Commission recommended privatizing the entire Department of Corrections. Software entrepreneur John Babiarz, who had never previously worked in corrections, and one other commission member were responsible for this recommendation. "New Hampshire needs the money elsewhere," Babiarz explains. "States have to have prisons and people need to be incarcerated. The question is, How do we do it cheaper? We can't do it alone as a government agency. Maybe just the idea of privatization has some people thinking they need to operate more efficiently."

At the same time, many impoverished counties have in recent years essentially converted themselves into for-profit prison speculators, often in conjunction with private companies, their lobbyists and middlemen. These small counties have issued bonds to build prisons and immigrant detention centers and have then approached federal agencies, trying to woo prisoner contracts by offering rock-bottom prices.

Close to 600 miles southeast of Florence, the dying oil town of Pecos, in the remote West Texas county of Reeves, is praying that the GEO Group can bring 800 state prisoners from Arizona to town. And fast.

Pecos--bona fide cowboy territory, where in 1883 the world's first ever rodeo wowed locals--boomed in the 1950s, its farmers' pockets flush with cotton dollars. It crashed somewhat in the 1960s. Then in the 1970s it boomed again, this time floating on the West Texas oil rush. In the 1980s, when the local oil industry bottomed out, the city once more lost its bearings. Its population of 9,000 started dwindling, then collapsing, its young people began leaving, cinder-block and wood houses were left to decay, and the dry, dusty desert began reclaiming abandoned lots. Ugly and aimless, Pecos began casting around for a third boom. With prisons, Reeves County officials thought they had found the answer.

In the late 1980s, the county issued revenue bonds to build a 1,000-bed prison, which they then leased out to the Federal Bureau of Prisons. In the mid-1990s a newly elected judge, Jimmy Galindo, and the four county commissioners arranged for another bond issue to construct a second 1,000-bed prison. Again, the Feds stepped in with a nice contract, lured by the low fees requested by Reeves County.

Outside the prison system, however, things were going from bad to worse. A decade-long drought crippled local farming; a local frozen-food company closed down, with the loss of more than 500 jobs; and a salt mine shut down with the loss of 800 more. Prisons, it seemed--as well as the ubiquitous edge-of-town Wal-Mart--were the only source of income.

With this backdrop, a couple of years back Galindo and the commissioners got greedy. With no indication that the Bureau of Prisons was interested in a third Pecos facility, they authorized the issuing of millions of dollars more in bonds for yet another add-on to the prison complex. It raised the total value of the bonds issued for prisons since the late 1980s to approximately $90 million--a vast sum for a county with an annual budget of only $5 million. Built entirely on spec, the prison, a prefab shard on a windswept desert plateau, opened for business in March. "Judge Galindo really thought he could make Pecos the prison capital of the United States," says County Treasurer Linda Clark.

There was only one problem: The Feds didn't want to send any more prisoners down to Pecos. With no prisoners and no incoming money, Reeves County found itself having to service a bond debt that came to close to $500,000 a month. What little surplus the county had been making on its contracts with the Bureau of Prisons for the first two facilities, money that had gone to cushion the general fund slightly, now went back into servicing debt for the empty third prison.

Galindo, a large man with salt-and-pepper hair and an ingratiating smile that rapidly turns sour when asked questions about the prisons, abruptly left his office in the county courthouse and set up shop in a small building within the sprawling prison complex one mile southwest of town. There, carefully avoiding the prying eyes of his county treasurer and auditor--as well as a handful of ineffective and somewhat conspiratorial residents who had sworn to bring Galindo to his knees--he began desperately wooing the private prison sector, hoping they would come in and bail out the county.

At the end of 2003, GEO Group agreed to take over the three facilities on a ten-year contract, and to use its out-of-state contacts to bring in prisoners to fill the empty, dollar-eating third site. Since the prison was already built, and since the county carried the responsibility for servicing the debt, it was essentially a risk-free proposition for the corporation. Moreover, according to county auditor Lynn Owens, as soon as the total prison population for the three facilities rises above 2,200, GEO's monthly fee is slated to rise from $62,500 to $330,000, whether that population is 2,201 or 3,000. Since the two existing prisons already have a combined population of more than 2,000, and since the county still has to pay the salaries of all the guards, the medical expenses of prisoners, all programming costs, food expenses and utilities, Owens believes this contract, negotiated by Galindo, amounts to a sweetheart deal for the private company. So why pay GEO this much money? "We've spent almost a year now trying to attract inmates" to the third prison, Owens explains. "We haven't attracted inmates. Through GEO's expertise they can generate us inmates." Using that expertise, GEO immediately began wooing Arizona, a state that imports hundreds of prisoners from Alaska and Hawaii to do time in its private facilities, while also exporting its own state prisoners to private sites in Texas and Oklahoma.

Galindo ignored repeated phone calls and visits to his courthouse office. I did, however, finally corner him in his prison office early one morning. The important thing, Galindo insisted, was that I understand that he was only interested in providing jobs to his constituents. "It's unfortunate that so many people are incarcerated," the judge stated, a slight frown of empathy on his face. "But given the laws with regards to drug trafficking and other illegal activities, that trend more than likely is not going to slow down. I believe we provide a vital service to our customers--and we live in a part of this country where it's very difficult to create and sustain jobs in a global market. [Prisons] become a very clean industry for us to provide employment to citizens. I look at it as a community development project."

Amazingly, when it comes to county prison building, and private prison company brazenness, Pecos doesn't top out the scale. A slew of even poorer, more sparsely populated Texas counties, have recently been effectively hijacked by extraordinarily aggressive prison companies that have convinced the commissioners to build prisons and holding facilities on spec, paid for through bonds issued via a shell company known as a "public facility corporation," whose board members are the county commissioners and judges, while at the same time signing a contract to bring the private companies in to manage whatever prison ends up opening. In each instance, the private company has essentially built in the right to walk away from the project, at no cost to itself, should the prisoners and the money not start flowing in. Feasibility studies of these deals by opponents of the industry have cast considerable doubt on whether the counties will ever be able to break even on their prisons, yet even before the first prisoners arrive the private companies and their middlemen routinely make huge profits from advance payouts of the money raised from gullible private investors by the bond issue.

In the tiny hamlet of Sierra Blanca, the county seat of Hudspeth County, Texas, just east of El Paso, junk bonds claiming to pay an astonishing 12 percent interest (close to double the interest paid on the Pecos prison bonds) are funding a $24 million facility that will be operated by Emerald Correctional Management--the same company that convinced La Salle County, in South Texas, to issue an even larger junk bond for an equally shaky prison project a couple of years back. As in La Salle, the company promised the prison would lure either immigration prisoners or US Marshals Service detainees and, in so doing, generate a domino effect of huge economic advances. Yet in both cases, the huge prisons will effectively tap the arid counties' existing reserves of water--meaning, in effect, that no new businesses can now come in without the county having to spend huge amounts of cash to upgrade the water infrastructure.

When I walked into County Judge Becky Dean Walker's office on the second floor of the sprawling Hudspeth County courthouse to interview her about the decision to get into the incarceration business, the first question she asked was, "Are you sure you're not with Billy Addington?" At the end of the interview she repeated the question. This time around, I asked who Billy Addington was. "He's the only one in town against the prison," the judge answered. Walker's husband, who had just come in, added bitterly, "He's always against everything in this town."

Addington, it turned out, was indeed against the prison. A thin, middle-aged man with straggly long hair and the threadbare working clothes of someone without a lick of spare cash, Addington lives in a stone house on an unpaved road, surrounded by hulks of old, rusting cars, just behind Interstate 10. His phone number is unlisted (he claims because of death threats), and his property is protected by snapping dogs.

Addington's grandfather moved to Sierra Blanca close to a hundred years ago, and Bill regards this hostile corner of West Texas as his heritage, and preserving its integrity his obligation. He alienated the town's political elite by waging a decades-long, and ultimately victorious, legal campaign to stop the government from opening a huge radioactive waste dump in the county; and he further cemented his reputation as a crazy radical by waging a public relations war against the county's decision to open a toxic sewage sludge dump--every day, for nearly a decade, between 200 and 400 tons of New York State sewage, waste deemed too toxic for dumping within the Empire State, was unloaded from rail cars and emptied onto 79,000 acres on the other side of the low-rise mesa from Sierra Blanca. Now he finds himself the most vocal opponent of the new prison being constructed hardly more than a stone's throw from his property. "I tell you what," Addington says fiercely. "It's built on a house of cards. It is a risky thing."

Risky or not, Sierra Blanca's new facility is rapidly rising from its foundations, another rolled-barbed-wire-surrounded concrete scar on the West Texas scrub. Another symbol of the new priorities and the new economic realities reshaping an increasingly hollowed-out America. There is, says Judge Walker, no reason not to build the prison. If it goes well, she says, it may help bring the depressed county a handful of jobs. If it doesn't, then "the county could suffer if we wanted to bond something again. It'd be harder to get bonds. But Hudspeth County is poor enough that it doesn't do bonds. I'm not sure exactly how it works. I don't know. What the county hoped, the commissioners were hoping to accomplish, is jobs."